EasyJet to Join FTSE 100 in Defiance of Founder Stelios’s Fury

March 1 (Bloomberg) -- EasyJet Plc is set to ascend to the
FTSE 100 Index next week, joining British Airways on the U.K.
benchmark less than a month after shares of Europe’s second-biggest low-cost carrier rose to a record.

EasyJet has doubled its value to 3.97 billion pounds ($6.02
billion) in the past 12 months, making the Luton, England-based
airline the 85th-largest company listed in London at 8:39 a.m.,
according to data compiled by Bloomberg. Businesses can join the
FTSE 100 only when they rank among the top 90 to avoid yo-yoing.

From two planes in 1995, EasyJet has grown to 214 Airbus
SAS aircraft carrying more than 59 million people annually, 20
million fewer than rival Ryanair Holdings Plc. Led by Chief
Executive Officer Carolyn McCall, the company has refined its
no-frills model, using allocated seating, flexible tickets and
corporate agents to grab a bigger slice of the business market.

“There’s been a huge cost focus and they’ve been very
clever at targeting high-fee paying business traffic at primary
airports and taking that market share from the legacy carriers,
who have been cutting,” said Donal O’Neill, an analyst with
Goodbody Stockbrokers in Dublin. “The market value reflects the
underlying performance and the performance has been phenomenal.”

Cutoff Date

FTSE Group will announce its next quarterly assessment of
changes to the benchmark’s membership on March 6, basing its
decision on closing prices from the previous day. The changes
will take effect from the start of trading on March 15.

McCall, who stepped down as CEO of Guardian Media Group Plc
to join EasyJet in July 2010, targeted the airline’s on-time
performance, load factor and profit-per-seat. Her oversight has
seen on-time arrivals jump to 88 percent from 60 percent and the
load factor, a measure of occupancy, grow to 88.9 percent in
2012 from 87.2 percent two years earlier.

“Carolyn McCall at EasyJet was one of the standout
performers of 2012,” Willie Walsh, CEO of British Airways-parent International Consolidated Airlines Group SA, said Feb.
28 when he presented earnings. When IAG set cost targets to
overhaul its Spanish domestic and short-haul service, it
benchmarked against EasyJet, he told analysts.

McCall has opened negotiations with EasyJet founder Stelios
Haji-Ioannou, who has long opposed its growth plans. The
relationship with entrepreneur, who controls 37 percent of its
shares, remains contentious. Stelios, who goes by his first
name, cut his holding in January for the first time since 2004
and threatened to sell more stock if EasyJet buys more planes.

Prudent Plan

“If the board places another order for aircraft it will
destroy shareholder value into the future,” Stelios said in
January. “Instead of ordering new aircraft, EasyJet should aim
for a 10 percent profit margin.”

EasyJet has said it’s targeting “prudent” capacity
increases of 3 percent to 5 percent as it develops a proposal to
present to shareholders on fleet management after 2015 and
aircraft deliveries from 2017.

The airline lured 10 million corporate travelers in 2012
and boosted capacity to destinations including Switzerland and
France in the last three months of the year. It will add
lucrative business connections between Moscow and London, as
well as from Milan to Rome’s Fiumicino airport, in March.
Competitors flying on the low-cost carrier’s routes trimmed
capacity by 800,000 seats in the last quarter of 2012.

Other companies that may join the index include London
Stock Exchange Group Plc, ranked 90, while Serco Group Plc and
John Wood Group Plc may both be removed.